Things haven’t been so rosy for the nuclear industry in the last several years. Natural-gas prices have been dropping rapidly, making it harder for nuclear to compete as an energy source. Plus, the industry has faced increased scrutiny since last year’s meltdown at the Fukushima plant in Japan after an earthquake and tsunami, in the midst of a number of earthquake-related shutdowns in the United States over recent years.
Still, more than half of National Journal’s Energy & Environment Insiders argue that the industry will be buoyed by the Nuclear Regulatory Commission’s approval of two new reactors last week.
The licensing of the nation’s first new nuclear-power reactors in decades, Insiders said, will serve as a signal for the industry that the seemingly convoluted regulatory process actually works. Fifty-four percent of Insiders said that the approval will pave the way for other reactors to be built.
“Build them and more will come,” said one Insider.
Specifically, Insiders pointed to South Carolina-based SCANA, which is next in line for approval of two new reactors at its V.C. Summer Nuclear Station.
“There hasn’t been much immediate interest after those, but demonstrating that the [combined license] process at the NRC works reduces the regulatory risk and will help push others to pursue new builds over the next five years,” one Insider said.
Though the industry will be encouraged by the license approvals last week, progress will be slow, Insiders said.
“While federal approval of two new nuclear reactors makes clear that regulatory hurdles are not insurmountable, the economics for nuclear power remain the most formidable obstacle to new reactor construction,” said one Insider.
The cost of new nuclear power remains high, and with the plummeting cost of natural gas it will be extremely difficult to make nuclear energy competitive, many Insiders said.
Aside from a handful of new reactors such as SCANA’s that are already in the pipeline for approval, few other utilities are likely to follow that path, according to 46 percent of Insiders.
“It is simply not economically feasible to build a nuclear reactor right now, especially with natural-gas prices as low as they are, and safety standards as high as they are,” said one Insider.
The two new reactors approved for construction at Southern Company’s Vogtle plant in Georgia were a unique case, Insiders argued. After all, Southern Company is now set to receive an $8.3 billion loan guarantee from the Energy Department, which conditionally awarded it to the company two years ago.
“I think these plants were solely a product of the Recovery Act,” said one Insider.
Insiders overwhelmingly agreed that low natural-gas prices are the primary obstacle to building more nuclear plants in the United States. Fifty-two percent of Insiders said that this is the biggest hurdle for the nuclear industry, while others cited increased scrutiny and regulation in light of last year’s accident in Japan and other concerns, such as the unresolved question of where to store the nation's nuclear waste and the role of public-utility commissions.
"With energy, cost is paramount. Gas is cheaper and safer. Ask Japan," said one Insider.
- Yes 54%
- No 46%
“Build them and more will come. U.S. needs more zero-carbon, reliable, cheap power. Nuclear is the only current option.”
“Only for SCANA; others will wait for the economy to improve and for power prices to rise. If Southern builds Vogtle on time and on budget, Wall Street will be comfortable investing in other projects.”
“Absolutely ... just not soon. SCANA’s application for two new reactors at its Summer Plant in S.C. will be approved very soon and they will get built on the heels of Vogtle. There hasn’t been much immediate interest after those, but demonstrating that the [combined license] process at the NRC works reduces the regulatory risk and will help push others to pursue new builds over the next five years.”
“Likely slow, based on plans long underway. The market support for these huge investments remains limited, but existent.”
“This is a significant decision that portends well for other nuclear construction, despite the lack of a national energy policy.”
“The cost is too great with other forms of energy affordable and abundant.”
“The economics of nuclear power are poor. No level of subsidies (loan guarantees, tax credits, etc.) is going to make nuclear competitive.”
“These are unique, with high federal loan guarantees and with a state regulatory commission that is bending over backwards for these installations with ratepayer support.”
“It only shows it is possible to get a license under a process reformed years ago, but never before used, but the economics of nuclear vs. natural-gas electricity generation are such that no one else is likely to will follow this path.”
“Although there may be further reactions in the development/permitting pipeline, the outlook for natural-gas prices will make it highly unlikely that new nuclear plants will be constructed and operate.”
“The issue is fiscal and with the price of natural gas the only place nuclear reactors will be built are in regulated markets where utility commission sees benefit in generation portfolio diversity.”
“I think these plants were solely a product of the Recovery Act.”
“Nuclear power continues to be a very expensive way to boil water, and that is why Wall Street investors largely abandoned it decades ago. Natural-gas-fired generation, wind and solar, and efficiency improvements will continue to beat out nuclear power as more economic ways to meet future demand. The federal government might subsidize a few new nuclear plants, but the funding does not exist to socialize construction costs of a whole new generation of nukes -- and without such government subsidies not many new plants are likely to be built.”
“It's a mixed bag. Actually building two U.S. reactors will give greater certainty about the cost and time required to build a nuclear power plant, and if the plants come in on cost and schedule, that will help others on the cusp of a decision to go ahead. The problem is that the fundamental economics that allowed these reactors to go forward is sufficiently limited within the utility industry that not many other companies are on that cusp.”
What is the biggest obstacle to building more nuclear plants in the U.S.?
- Low natural gas prices 52%
- No price on carbon emissions 10%
- Increased scrutiny and regulation in light of last year’s accident in Japan 14%
- The Energy Department’s loan guarantee program, specifically its credit subsidy cost 5%
- Other 19%
Low natural gas prices
“The first three issues are all very important. The loan guarantee program's subsidy cost is a very small thing considering the huge outlays of money utilities must provide to get these plants built.”
“No question that natural gas is dominating electricity production decisions.”
“With natural gas prices so low that natural gas drilling itself is being scaled back, it is even less likely that utilities will be willing to invest in new reactor construction, particularly in the absence of a price on carbon emissions.”
“No matter what anyone says, the only reason there aren't more new builds in the queue is that cheap gas prices out new nuclear in the short run, and the short run is all Wall Street financing cares about. But for cheap gas, we'd have 10 new reactors being built now instead of just 4.”
“For all the effort of those opposing nuke's because of proliferation concerns, waste disposal, or safety - it just boils down to one thing - the economics of a given project. The NRC and DOE efforts over the last decade have lowered hurtles but they can't overcome bad economics and the natural gas glut with lower electricity prices may be the toughest barrier left.”
No price on carbon emissions
"The only thing that could possibly resuscitate nuclear would be to put a price on carbon emissions, and the nuclear industry made a huge mistake by failing to aggressively embrace such legislation. “
“I would put it the other way. The biggest boost nuclear could ever get would be a real, and long limit on carbon. Everything other factor (price of gas, level of regulation, level of subsidies or loans) is too volatile to be reliable.”
Increased scrutiny and regulation in light of last year’s accident in Japan
“Nuclear simply cannot pay for itself. It is an economic loser for many reasons including its continued risk of catastrophic injury to society.”
“All of the above and then some. Bottom line these are all serious obstacles, as is the issue of how to dispose of nuclear waste. Without massive taxpayer subsidies, the nuclear industry will die.”
“Low gas prices may seem the biggest hurdle now, but several other questions are always present:
- will state public utility commissions stick with the project?
- will the amazingly unsolved question of where to put the spent fuel rods ever get solved?
- how much time will environmental group challenges add to an already very long process?
These present uncertainties that many boards of directors will think too much, given the capital required.”
“1979-2011 could be considered the Dark Ages for nuclear power in the U.S. 2012 is the beginning of the Renaissance, but it will happen more slowly than hoped. The Age of Enlightenment is still a ways off. Cheap natural gas, lower electricity demand, safety concerns, high project costs, long-term storage questions, and more contribute to its slow emergence. The bigger obstacle is that, while Americans say they want a national energy strategy, we are manipulated and scared off by every new energy tragedy. The Deepwater Horizon, [Fukushima], Solyndra and Keystone events have each occurred within the last 2 years. Every option poses different set of risks, costs and benefits, but we are unwilling to work through them in order to design a credible path forward.”
“The biggest obstacle preventing the nuclear-power industry from building more than an additional handful of plants is that the NRC does not have the capacity or expertise to certify the newer and more innovative designs that are needed for a true nuclear renaissance.”
National Journal’s Energy and Environment Insiders Poll is a periodic survey of energy policy experts. They include:
Jeff Anderson, Paul Bailey, Kenneth Berlin, Andrew J. Black, Denise Bode, Kevin Book, Pat Bousliman, David Brown, Neil Brown, Stephen Brown, Kateri Callahan, McKie Campbell, Guy Caruso, Paul Cicio, Douglas Clapp, Eileen Claussen, Steve Cochran, Phyllis Cuttino, Kyle Danish, Lee Dehihns, Robbie Diamond, David Di Martino, Bob Dinneen, Sean Donahue, Jeff Duncan, John Felmy, Mike Ference, David Foster, Josh Freed, Don Furman, Paul Gilman, Richard Glick, Kate Gordon, Chuck Gray, Jason Grumet, Christopher Guith, Lewis Hay, Jeff Holmstead, David Holt, Skip Horvath, Bob Irvin, Bill Johnson, Gene Karpinski, Joseph T. Kelliher, Brian Kennedy, Kevin Knobloch, David Kreutzer, Fred Krupp, Tom Kuhn, Con Lass, Mindy Lubber, Frank Maisano, Drew Maloney, Roger Martella, John McArther, Mike McKenna, Bill McKibben, Kristina Moore, Richard Myers, Aric Newhouse, Frank O'Donnell, Mike Olson, T. Boone Pickens, Thomas Pyle, Hal Quinn, Rhone Resch, Barry Russell, Joseph Schultz, Bob Simon, Scott Sklar, Bill Snape, Jeff Sterba, Christine Tezak, Susan Tierney, Andrew Wheeler, Brian Wolff, Franz Wuerfmannsdobler, and Todd Young.